EAZ Backs US$1.5 Billion IMF Deal, Wants Treasury to Leave Room for Private Borrowers

The Zambian Economist — Mon, 12 Oct 2026 10:21:37 +0000

The Economics Association of Zambia has welcomed the IMF staff-level agreement as the cheapest kind of money Zambia can borrow. Its statement also carries a warning: the Grow Zambia Agenda will not work if government keeps soaking up the credit that businesses need.

By The Zambian Economist Analyst

KEY TAKEAWAYS

The Economics Association of Zambia (EAZ) has welcomed the staff-level agreement on a new IMF Extended Credit Facility of about US$1.5 billion (SDR 1.076 billion, roughly US$1.47 billion), calling it concessional finance of the kind Zambia should prioritise.
EAZ says the facility carries zero interest and should help hold inflation, interest rates, the exchange rate and reserves steady, which it describes as a necessary condition for the Grow Zambia Agenda.
The association wants the deal to reduce government borrowing on the domestic market, so that banks lend more to businesses and less to the Treasury.
It points to external shocks, from conflict-driven oil prices to a weather outlook that threatens energy and agriculture, as reasons the agreement has come at the right time.
EAZ asks government to keep disclosing information openly. The staff-level agreement still needs IMF Management and Executive Board approval before any money is released.

The Economics Association of Zambia has backed the staff-level agreement Zambia reached with the International Monetary Fund on 9 October, describing the proposed Extended Credit Facility as a welcome source of concessional finance at a time of mounting external risk. The statement was issued by EAZ National Secretary Dr John Musantu.

The agreement covers a proposed 36-month arrangement worth SDR 1.076 billion, about US$1.47 billion, which EAZ rounds to US$1.5 billion. It follows the US$1.7 billion programme that helped Zambia through its debt restructuring and has since ended.

Why EAZ calls this the right kind of debt

The association starts from the financing problem behind the Grow Zambia Agenda, the government plan to double the size of the economy. Domestic money alone will not pay for it, EAZ argues, so Zambia needs outside funding. That comes mainly through foreign direct investment or debt, and if it is debt, the association says concessional loans should come first.

An IMF Extended Credit Facility fits that description. EAZ notes that the facility comes at zero interest. Commercial borrowing, such as Eurobonds, costs far more and was at the centre of the default Zambia spent several years restructuring.

Stability first, then growth

EAZ lists what it means by a stable macroeconomic environment: controlled inflation, affordable interest rates, a stable exchange rate, sufficient reserves and strong domestic revenue collection. In its words, that stability is “a key enabler if not necessary condition” for the growth plan.

The timing matters. The association points to geopolitical conflicts pushing up global oil prices and to a weather outlook that could hurt Zambia’s power supply and harvests. A forecast El Niño season in 2026/2027 has already raised concern about water levels for hydropower and about crop output.

The private sector question

The most pointed part of the statement is about domestic credit. When government borrows heavily at home, banks can earn safe returns on Treasury bills and bonds, and they have less reason to lend to small businesses. Economists call this crowding out.

EAZ wants the IMF agreement to reduce that pressure. Once the facility materialises, the association says, it should cut government’s need to borrow from the domestic market to meet its spending obligations. Banks would then have more room, and more reason, to lend to SMEs and the wider private sector.

“The Grow Zambia Agenda is only sustainable and feasible if the country can create a thriving and profitable private sector,” the statement reads.

What it means for businesses and households

For a business owner, the link runs through interest rates and the Kwacha. If government borrows less at home, pressure on domestic interest rates should ease over time, and loans become easier to get. If IMF support strengthens reserves and confidence, the Kwacha is likely to be steadier, which helps importers and anyone pricing goods in dollars.

For households, a steadier currency and lower inflation protect what a salary can buy. None of this is automatic. It depends on the programme being approved, on the reforms attached to it and on how the Treasury manages its borrowing in the 2027 Budget.

What happens next

A staff-level agreement is not yet a loan. The deal still needs agreed policy reforms, any prior actions and approval by IMF Management and the Executive Board. Finance Minister Dr Situmbeko Musokotwane is leading Zambia’s delegation at the IMF and World Bank Annual Meetings in Bangkok, which run until 18 October.

EAZ closed its statement by asking government to keep disclosing information openly, so that the public can debate economic policy on the facts as Zambia pursues its plan to double the size of the economy.

Hub: Macroeconomy & Policy.

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